Sandeep Chaturvedi, President, Biodiesel Association of India, talks about the green fuel market in India, how biodiesel can play an important role in addressing pollution and health issues and what the Government needs to do to support this industry.
In an attempt to keep Infraline Energys’ readers abreast with the key issues and challenges engulfing the sector, Infraline Energy tries to bring forth the opinion of key personnel whose decisions and opinion play a vital role in shaping the sector. Please find below excerpts from the interview that Infraline Energy conducted:
There has been lot of concerns over air pollution in India. What is your outlook on Green fuels in India?
According to a recent survey from IIT Mumbai, almost 83000 people die premature deaths each year in Mumbai and Delhi alone due to air pollution. The amount of financial loss to the public in general is almost 90,000 crore per year in terms of respiratory ailment, loss of opportunity, days off etc.
If you have to cross a gorge, you have to jump 100%. If you take half hearted measures, you will fall in that gorge. The problem is that we need a green fuel policy that addresses all these issues. The policy that was made by the UPA government in 2009 doesn’t say anything. It is actually not implementable. It was expected that the current government will understand things in a year and will bring out the policy. But that has not happened. There is lot of support at the top from the Prime Minister, who says that 10% blending needs to be achieved and lot of financial support is there. I think that the message is loud and clear to the nodal ministry i.e. Ministry of New and Renewable Energy (MNRE) that they should come out with a policy which addresses all these issues for next 10 years.
If this industry has to develop in the country, investment has to come up under Make in India. For that investor has to have a clear horizon that this is the policy of the Government of India for next 10 years. If I am going to put up a project now, it takes me two years to get off ground. After that it takes five years to break even. The signal that we get right now is that yes there is lot of support right at the top, but then there is no policy at the ground from the nodal ministry.
The policy should address key issues immediately that India needs green fuels, and steps that need to be taken to create feedstock, processing capacity etc. See there are three things in biofuels. First is the market which head up to the Petroleum Minister who has given a tremendous push and created market for green fuels. All the oil marketing companies (OMCs) today are in the market to buy green fuels. Second is the processing capacity in the country to convert raw material into green fuel. As far as biodiesel is concerned, we have 1.2 Million Ton (MT) of installed capacity. Third is the raw material and taxes. Problem is that if the policy doesn’t step in, you will never create enough raw materials, and if you don’t streamline the taxation, inspite of market and processing capacity, you will never achieve your targets.
What according to you should be the main contours of the Green Fuel Policy that are required today in India?
The country consumes 22 MT of vegetable oil each year. This oil generates 3 to 4 MT of used cooking oil which goes into our food cycle again which is not a good thing. We may be spending lakhs and crores of rupees just on health related ailments due to adulteration happening in the country. Because used cooking oil is polymerized, it is not good for heart, causes obesity, cancer and all sorts of problems, and hence should not be permitted. But unfortunately, there is no law that governs and controls this particular item. The Government may say that we have banned it, but there has to be a mechanism to check it. This could a very good raw material for bio diesel. So you need a policy on that immediately. By this, you are doing two things. You are saving the masses and giving healthy life. Second, India has a huge tribal wealth where lots of oilseeds are being generated. You can provide reasonable and gainful employment to people in tribal belts that could be another raw material for bio diesel. So opportunities are available in the country, but someone has to take interest and drive the policy. We have made made a submission that 10% diesel needs to be substituted by 2022.
Is 10% diesel substitution by biodiesel blending doable?
Yes, it is doable. The domestic consumption of diesel is 80 MT and 4 MT you can do with feedstock I have already specified and another 1-2 MT can also be done through other sources.
In terms of diesel blending, can you increase it from 10%? Are there any demand and supply side issues?
You can even do 20% and that is not a problem. The key issue here is lack of policy and taxation. Bio diesel tax is zero percent of five percent; Excise Duty is zero till April 1, 2017. On diesel the taxes are almost close to 30%. The moment someone blends it and buy it, state governments are not ready to budge even an inch. They will tax the entire thing. And biodiesel is being taxed at 24% which is a great concern. By doing so you are discouraging a green fuel. So a policy needs to come out specifying how much blending needs to be done. There are no supply side constraints.
Demand for biodiesel is huge. The key trigger is environment, health of people. As per me, handling supply side issues is a minor thing if the major issue is sorted out as far as policy is concerned. Nothing goes on a start-stop button, every market needs to develop. These are learning curves. This is not an issue at all and it can be sorted out at the level of supply managers.
How will coming of GST impact the biodiesel market in India?
It will be a major disaster for biofuels. Petroleum products are not in GST, but biodiesel will be under GST. The oil marketing companies (OMCs) who want to blend will take at an additional cost and they cannot pass it on. It is very discouraging. We have made a submission to the Finance Ministry, and we keep doing that. But it is the policy which should have addressed it. For next 10 years, there should be a mechanism to address the taxation related issues and a policy should have come by now.
Is pricing an issue when it comes to adoption of biodiesel as a green fuel?
Price is not an issue as most of the purchase is done through public tendering and prices are well discovered and is not a problem. And also in future there should not be a problem. If you address all these issues, you will have the industry up and running. It can go very well for Make in India and Swachh Bharat. All that is required is a policy which incorporates these things, sets timeline of five to 10 years for making investments, creating jobs. We are currently doing blending right from Haldia, Paradip, Vizag, Vijayawada, Kakinada etc and the eastern belt. It is happening since last one year. 5% diesel is blended with bio diesel. But issues of taxation, raw material not being available etc are cropping up. If there is extra 24% tax, who will buy it?
If you need a product to mitigate pollution, will it come for free? You have killed your rivers, polluted your environment to such an extent, there should be sense of responsibility to address this issue. You have to pay to get something better in life. If government is not willing to relent on taxes, probably polluters will have to pay.
Infraline Energy would like to thank the contributor for his/her valuable time and opinion shared on the topic.